The embattled security company Blackwater, which became known as the privatised face of warfare in Iraq, faces new legal difficulties after its former president and four other former employees were charged with federal weapons charges related to the alleged stockpiling of automatic rifles.

The charges come from a 2008 raid by the Federal Bureau of Alcohol, Tobacco, Firearms and Explosives on the firm's sprawling ranch in North Carolina. Agents found 22 automatic weapons, including 17 AK-47s, on the property in potential violation of a law that bans private individuals or companies buying such weapons registered after 1986.

Among those facing charges are Gary Jackson, the company's former president until last year; its former general counsel, Andrew Howell; and former vice president Bill Mathews.

The fresh round of federal legal trouble is a blow to Blackwater, which has been trying to rebuild its reputation under its new name Xe Services following a series of damaging allegations about its conduct in Iraq. In 2005 Blackwater guards became embroiled in controversy after they shot into an Iraqi civilian car, and the following year a drunk employee killed an Iraqi security guard.

In the most serious incident in 2007, its guards were involved in a Baghdad shooting in which 17 unarmed Iraqi civilians died. Several of the Blackwater people were prosecuted but the accusations were thrown out of court.

Blackwater claims that the weapons found at its North Carolina headquarters were the legitimate result of a deal struck in 2005 between the firm and the local police department, in which Blackwater would hold the guns at its armoury on behalf of the sheriff, who was legally permitted to own them. The company told Associated Press at the time of the raids that the storage of the weapons was nothing more than a "professional courtesy" to the police department.

Apart from the ongoing struggle to revive its reputation, Xe Services is likely to find the timing of the latest charges uncomfortable. It is currently trying to win a Pentagon contract to train police in Afghanistan, worth up to $1bn.